Course of dealing: Definition, Example and Related Terms
What is Course of dealing ?
Course of dealing refers to a sequence of previous conduct between parties involved in a transaction that establishes a common basis for interpreting their interactions. It's essentially about understanding past behavior to inform the interpretation of current and future dealings. This can be incredibly useful in resolving disputes and ensuring all parties are on the same page.
For example, if two companies have been doing business together for years, their course of dealing can help interpret any ambiguous terms or actions in a new contract. This historical context provides a framework for understanding what both parties likely meant or intended, based on how they have interacted in the past.
Understanding course of dealing is crucial for contract managers. It helps in negotiating terms that are consistent with past practices and can also provide evidence in case of a dispute.
It's important to document and review past conduct regularly to ensure that the course of dealing remains relevant and beneficial. As circumstances change, what was once a common understanding might evolve, and keeping records can help track these changes over time.
Example(s)
Scenario Description An electronics supplier and a retailer have been doing business for over a decade, consistently accepting each other's terms and conditions without negotiation. The long-standing course of dealing indicates that any new orders or interactions will be interpreted in light of their established practices, making it easier to resolve any ambiguities or disputes. A construction company and its subcontractors have a history of informal agreements that have been consistently honored without formal contracts. The course of dealing suggests that even if a formal contract is not in place, previous interactions can be used as a reference to resolve any disputes or misunderstandings that arise.